This section is intended to help home buyers who are either new to the process or are from other parts of the country where practices may be slightly different. We have attempted to write this in a chronological fashion in the hope that this will make it easier to understand. The process starts at the point you have found a home that you like, and you are thinking about making an offer.
THE PURCHASE AND SALE AGREEMENT
You are free to make any offer you wish with any contingencies, etc. It is in your best interest to make a fair and reasonable offer based on market activity and conditions. You may have contingencies for home inspections, pest damage, mortgage. lead paint, radon, water quality, septic or any other reasonable concern. The fact that you include a contingency in your offer does not mean that you have to have the particular conditions tested; it only means that you have the right to do so. Be aware that the smaller the number of contingencies, the more attractive the offer.
If you are able to obtain a prequalification letter from a lending institution stating that you are pre-qualified for the amount of mortgage for which you are applying, it will make your offer stronger. The length of time to present the offer is dependent upon how long it takes to contact the relevant parties. It is in your best interest to have a reasonable quick response.
Once you have worked with your broker to write up and sign the Offer, and it has been presented, one of three things can happen:
- The offer is accepted as is. In this case proceed to step 3.
- The offer is rejected. In this case, it usually means the sellers feel that the offer was not close enough to what they are looking for, and they do not choose to respond. You, at that point, may submit a new offer or proceed to look for another home. Often it may be useful to keep the negotiation process open, even if it appears that the process is at a standstill. Non-antagonistic and open communication can often save negotiations when all seems lost.
- The sellers present you with a counter offer. You may then accept their offer, present your own counter offer, or withdraw entirely.
THE SIGNED OFFER
Only a written acceptance or SIGNED offer is binding. Time is of the essence! Signatures should be obtained quickly. All terms of the offer must be agreed upon by both parties and signed by both parties.
THE INSPECTION
Inspections normally take place within ten business days of the signed offer. Remember that the date included in the offer for the inspection contingency is the deadline by which you must put in writing any objection, request for adjustment or rejection of the property. If the date passes without anything in writing from you, it is assumed that all inspection contingencies are satisfied.
THE CLOSING
The closing will occur on whatever date is agreed upon by both buyer and seller. It may be left for future determination with a date "not to exceed" a specific month, day or year. An average length of time AFTER signing a Purchase and Sale Agreement for a closing to occur is 30 to 60 days. This allows the lending institution enough time to complete their necessary paperwork, for the assigned closing attorney to collect and prepare his/her documents and for the seller to pack belongings and move comfortably.
SOME WORDS OF WISDOM
Have a Home Inspection - Unless you are a professional in the building trade, or you plan to rebuild the house, an inspection is an important precaution. A professional inspector will be able to protect your investment by advising you of real or potential defects in your property.
Talk with One or More Lenders Before you Begin House Hunting - Before you are ready to make an Offer, find out:
- What type of mortgage loan is best for your budget and financial plans
- How much house you qualify for
- What problems you may need to resolve
- All of this advice should be available to you at no cost.
Your sales agent can provide you with a list of qualified inspectors, attorneys and lenders. We cannot recommend particular individuals.
TYPICAL HOME PURCHASE COSTS
POINTS or Loan Origination Fee.
INTEREST OF THE LOAN - Interest covering the period from date of closing until end of month.
TITLE INSURANCE - Banks require this insurance. Owners title insurance policy optional.
ATTORNEY'S FEES - Will do title search and handle the closing for the bank.
SURVEY FEES - The Lender or Title Insurance Company will require a Class D Survey of the house and the boundaries of the property, as well as easements and rights of way.
RECORDING FEES - The buyer pays the fees for legally recording the new deed and mortgage.
HOMEOWNER'S INSURANCE - Proof of current policy is necessary at the closing.
ADJUSTMENTS COSTS - Paid to the seller at closing (where applicable): Buyer's share of prepaid property taxes; heating oil remaining in tank; sewer service charge, if applicable.
